The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

This is an interesting idea: that business should not be investing in marketing through social media. This means, largely, not investing in advertising on Facebook or Twitter. It's not so much that no one has quite worked out whether it is effective or not....and those who have measured Facebook seem to think that it's much less effective than other marketing spends....but rather that social media is, by its very nature, out of the control of the marketeers.

This is why it is understandable that some companies are beginning to withdraw their investment in promoting themselves on social media sites, especially when they are unsure of the benefits and leave themselves open to unfettered criticism.

....

“This represents an interesting about-turn. We saw investment in social media increase steadily throughout 2011, to reach the highest levels ever by the end of the year. However, as financial services brands embraced new methods for communicating with customers, they opened themselves up to criticism and negative sentiment,” said Anthony Cooper, Pearlfinders managing director.

“Banks, for instance, are becoming very wary of social channels and many are reconsidering whether they should invest in something that generates negative returns.“A number of recent high profile events have demonstrated how financial services companies, such as banks, are simply not comfortable with transparency and openness. With social media, everything is in the public domain, which is well outside of their comfort zones.

You can imagine that a bank trying to market a new mortgage offer is going to be less than happy when Twitter explodes into a storm of "What about Libor?", "What about the billions we gave you?" and "What about the bonuses?" to give only the politer responses likely in the UK.

It may well make sense for a business not to market into such uncontrolled space rather than simply leaping aboard the new bandwagon.

This doesn't mean that social media, the Facebooks and Twitters of the new digital world, are not useful to companies and their marketeers. Regular monitoring of them to see what is being said about products and brands is essential. Thre's nothing quite like having a finger on the pulse of the zeitgeist in real time which is what such monitoring allows.

Similarly, the use of either as an information feed seems very sensible indeed. Websites do go down, services do go offline, planes are late, products run out. These are all things that can be usefully announced in either or both places.

But either of these are simply to use those social media sites in the way that millions already do. To monitor what is being said about subjects of interest and to tell others things that they may find of interest.

It's also true that neither of these things require spending money with either service. And that's the part that may not be worthwhile to business: actually sending on advertising on the sites. Precisely because the reaction to such is entirely out of the marketers' control and just as visible as the marketing itself.

I'm not wholly sure that the idea is 100% correct although I can obviously see that it is for some companies some of the time. The really interesting thing though is what this means for the finances of Twitter and Facebook. Both in the medium term depend upon the idea that business will use them as a marketing tool, will spend money on advertising through the channels. And if it turns out that this just isn't a good idea for the companies then where go the finances of the two social media companies?